Scott Sedam, president of TrueNorth Development (www.truen.com), spends most of his time working in the trenches with builders, suppliers and trade contractors. His Lean Builder blog appears weekly at HousingZone.com. He welcomes your feedback at scott@truen.com.

Closing the sales fulfillment gap: the missing link in Lean

During Operation Desert Storm in the early 90s, France’s decision to not support the U.S. intervention revived an old joke from the World War II era.

Q: How many French troops does it take to defend Paris?

A: No one knows. It’s never been tried.

While listening recently to a favorite VP of Operations lament his ongoing and seemingly unsolvable sales issues that regularly upset his otherwise well-oiled machine, I tried a new version of that witticism on him.

Q: Hey Bob … how many salespeople does it take to manage a customer from signup to close?

A: No one knows. It’s never been tried.

12 Steps for Solving the Sales Fulfillment Gap:

1.Decide what business you are in and exactly what level of options and selections you offer.

2.Build systems that enable the consistent fulfillment to that level of options and selections.

3.Establish the company-wide superordinate goal of delighted customers at the closing table who meet every “decision date” date for options and selections.

4.Make the choice: Either (A) your salespeople are fully responsible to manage customers from contract through closing or (B) hire someone to do it for them.

5.Bring sales, purchasing and construction together and clearly, firmly agree on the cut-off dates for each option and section.

6.Flowcharts your schedule from project design through closing, identifying each obstacle in the way of meeting decision dates then address those head-on.

7.The role of sales management is to lead, support and still a discipline with salespeople and/or design center staff to complete the post-contract fulfillment process.

8.Give your salespeople and/or design center staff a chance to learn the process of “sales fulfillment.” Those who cannot learn and practice it need to find a new home.

9.Find a sales trainer who accepts that a major part his or her job is to teach salespeople and/or design center staff that a sale without on-time fulfillment is an incomplete sale.

10.Align your reward systems to support on-time fulfillment.

11.Provide full support. If any member of the company team is building obstacles, tear them down.

I’ll admit this is a slight exaggeration, but not a great one. Failures in what I call “sales fulfillment,” the process of managing the customer from signup through every option, selection, and color and on to the day of closing, are rampant. This issue makes Bob and a few hundred other VPs of construction, purchasing, and operations completely crazy and can easily cost a builder half its profit, yet it's rare to see a management team do much about it. I have seen this firsthand with builders of all types and all sizes in five countries and when I bring the topic up in presentations, I get a lot of company up front afterward, spilling their version of this age-old tale. Most of them are grizzled veterans of the construction wars, desperately trying to bring order and predictability to the frequently chaotic muddle that is homebuilding. But I also hear from the fresher-faced newbies, incredulous that this problem even exists.

There are myriad variables that confuse this issue and make it difficult to get our arms around, but the big picture is quite simple. Whether you offer 500 options or five, whether you build in 180 days or 60, whether you have an internal design center, a contract design house, or your sales staff runs it from the from the model, a builder’s ability to proactively manage a customer from contract through close with every option and selection made on time profoundly impacts the bottom line. As the schedule goes, so goes the builder, and a disregard for decision dates always means disarray in the schedule, which translates to frustrated suppliers and trades, unhappy customers, and lost profit.

A good way to describe the impact of a failure in fulfillment is to break down the elements required to get it right, which fit reasonably well into 12 steps in approximate though not always strict order. Your steps, of course, may differ, but the issues are universal. In the October issue of Professional Builder, I will publish a feature article on this issue with more detail on the 12 steps. Meanwhile, I would love to hear from readers who have faced down this problem and how you did it. That could be great content for a follow-up article (with your permission, of course!)

Scott Sedam is president of TrueNorth Development, Inc. TrueNorth and its staff of field consultants has implemented Lean Process, organizational improvement training, and planning workshops with more than 150 builders in five countries. Visit www.TrueN.com and contact Scott directly at scott@truen.com.